International Journal of

Emerging Research in Management &Technology

ISSN: 2278-9359

Research Article

January
2013

Working process of Payroll in SAP HR Module

Dheeraj Singh, Research scholar, Mewar University Chhitorgarh Rajasthan
Dr S.C Jain, Krishna Institute of Management & Technology Bijnor
ABSTRACT:

Payroll means maintain records of employees. In/Out data updating. Processing Salaries, statutory payments like
PF,ESI& TDS deductions and payments. Generate Payslips and distribution. In short "Maintain Employees Data,
Distributing Salries and making all statutory deductions & Payments is called Payroll Processing" My paper is based
on payroll implementation and working process of payroll in SAP HR module. Information and database system
projects are initiated to improve the accuracy of the processing dataand ensure the procedure prescribing how to do a
specific task. A computer program can maintainaccurate and consistent database, hence resulting is an improved
performance. The program efficiency can be increased considerably by including automatic calculations and fast data
retrieval capabilities. This will dramatically reduce the manual error and permit more study at lower cost and
effort.One of the main jobs of admin section is to generate pay roll for all the employees and theirPayment reports.
Due to the non-availability of a proper database management system all the data is handled manually. Because of
large volume of payroll data and calculations, it is very difficult to handle the data manually and delayed the pay roll
process. This created an immediate need to develop a new computer based pay roll data base system to avoid the delay
in generating pay bills, loan schedules, payment reports, pay slips and so on. The payroll program is run at a specific
point in time, not only to calculate an employees basic remuneration but also any special payments, overtime
payments or bonuses. The Payroll Process in SAP begins with the entry and maintenance of data and ends with the
Subsequent Activities performed after each payroll is completed to satisfaction.
KEY WORDS-- Payroll System, SAP HR Module, Payroll Working Process,Manual Payroll,Computerized Payroll
I.
INTRODUCTION
Human Resource Management (HRM) is the function within an organization that focuses on recruitment of, management
of, and providing direction for the people who work in the organization.HRM is the organizational function that deals
with issues related to people such as compensation, hiring, performance management, organization development, safety,
wellness, benefits, employee motivation, communication, payroll, administration, and training.The part of human
resource management that specifically deals with training and development of the employees. Human resource
development includestraining an individual after he/she is first hired, providingopportunities to learn new skills,
distributing resources that are beneficial for the employee'stasks, and any other developmental activities. The term
"payroll" encompasses every employee of a company who receives a regular wage or other compensation. Some
employees may be paid a steady salary while others are paid for hours worked or the number of items produced. All of
these different payment methods are calculated by a payroll specialist and the appropriate pay checks are issued.
Companies often use objective measuring tools such as timecards or timesheets completed by supervisors to determine
the total amount of compensation due each pay period.

1.
2.
3.
4.

II.
OBJECTIVES
Comparison between manual payroll and computerised payroll
Rational benefits of computerised systems
Benefits for reader to understand the general aspects of payroll on SAP HR Module

III.
MEANING OF PAYROLL
Payroll is one of the most important functions of any human resources department. When employee payroll data is
processed and recorded efficiently, it helps the entire organization run more smoothly.
Manual Payroll-: A manual payroll system is done by hand. This means that all wage calculations are performed on
paper; this includes computation of hours, statutory deductions (taxes) and involuntary deductions (health and pension
benefits). An advantage of using a manual payroll system is that it costs very little to use. However, it takes a lot of time
and energy to do manual payroll processing. Additionally, there is more room for error with this method. Employees'
paychecks and tax filings are susceptible to inaccuracy as a result. In particular, tax filing errors can be costly due to
penalties from the government.

Dheeraj Singh

Page 51

International Journal of
Emerging Research in Management &Technology
ISSN: 2278-9359

Research Article

January
2013

Computerized Payroll-: A computerized payroll system is when the employer purchases payroll software and uses it as
her means to process payroll. This method is much quicker than a manual payroll system. Some companies hire an inhouse payroll staff to process their payroll through the computerized payroll system. The payroll staffs are responsible
for entering all wages to be paid into the system. The system computes the wages, stores payroll information, and print
checks. The payroll professional can also access payroll reports, which allows him to check for errors and correct them
before the employee receives her pay check. Computerized payroll also reduces the amount of paperwork to be filed, as
most of the payroll information can be stored in the system.
IV.
GENERAL WORKING PROCESS OF PAYROLL ON SAP HR MODULE
Salary Structure-: We can divide the Salary structure in parts:
Band 5 : This salary structure does not contain the Employee welfare & Food coupons but it
contains
Bonus.
Band 4 : It contain Bonus, Employee welfare & Food coupons
Band 3 &Above : Excluding Bonus, It contains PLI as well rest is same as Band 4.
Head
Basic

Remarks
Same for all Bands

Payout type
Earning

Only Band 4 and

CTC above 15000
All Bands
Gross Salary less
than 10000
Only Band 4 & Band
5

Earning

Statutory

HRA
Special Allowance
Medical
Employee Welfare
LTA
Employer PF
Employer ESI
Bonus

Deduction
Deduction
Earning

Payable Salary = Net salary / (No. of days in a month LOP)

Band-5

Band-4

Band-3 & Above

Head

Head

Head

Basic

Basic

Basic

HRA

HRA

HRA

Special Allowance

Special Allowance

Special Allowance

Medical

Medical

Medical

Employee Welfare

Employee Welfare

LTA

LTA

Employer PF
Employer ESI

Employer PF
Bonus
Bonus
Dheeraj Singh

Employer PF
Bonus

Page 52

International Journal of
Emerging Research in Management &Technology

Research Article

ISSN: 2278-9359

January
2013

Difference between payroll and attendance cycle

Cycle
Attendance Cycle
Payroll Cycle
No of days salary

Period
From 21st of last month to 20th of current month
From 1st of every month to last day of month
No of days in a month LOP(loss of pay)

Suppose we are processing the payroll for June 08 then our attendance cycle would be from 21st May 08 to 20th June 08
and payroll cycle would be from 1st June 08 to 30th June 08.
The last date for attendance correction is before 20th of every month and the same is communicated by Central MIS team
on monthly basis.
MONTHLY LEAVE CALCULATION

Step 1 :HR Collects the monthly attendance from Central MIS team.
Step 2 :Division of leave into four category
EL = EL + HD
SL
CL
LOP = LP+UL+A+R+UR
Suppose if any employee has taken/availed more leave (authorized) against what he has in his leave account, then it will
be counted under TOTAL LOP
Note :Unauthorized leave count as LOP
SAP ID
80001111
80001111
80001111

Name
Deepak
Deepak
Deepak

Opening
5.5
2
2

Availed
10
3
1

Leave Type
EL
CL
SL

LOP
4.5
1
1

Earned Leave are credit to active employees account after completion of one month payroll cycle.
For Example:
Ravi has joined the organization on 5th June 08 and at the time of payroll processing his EL would be zero but after
completion of payroll cycle or at the end of each calendar month, EL will be credited in his account as per policy.
Policy Description-:During the calendar year a total of 18 days of Earned Leave will be earned. 1.5 leaves will accrue
after completion of each months service. If the employee joins before the 10th of the month 1.5 leaves will be credited,
if the employee joins after or on 10th and before 20th then 1 leave will be credited and if the employee joins after or on
20th and before 30th then a half day leave will be credited for the month.
Period(From To)
19
10 19
20 29

Dheeraj Singh

Leave Credit
1.5
1.0
0.5

Page 53

International Journal of
Emerging Research in Management &Technology

Research Article

ISSN: 2278-9359

January
2013

The attendance correction for current attendance cycle should reach to Central MIS team before 20th of every month. It
is also very important to verify the attendance on daily basis.
Other Earning-: On monthly basis HR receive the other earnings input and the last date of sending same is 14th of every
month.
Type and format of Other Earning-:
1. Approved Incentive Mail with SAP ID.

SAP ID

Name

Amount

Type of payment

Period

Status

Ex: Incentive/Production Incentive

Ex: Apr08

Ex:Active/Resigned

2. Approved Odd shift Allowance with SAP/IH ID.

SAP ID

Name

Amount

Type of payment

Period

Status

Ex: Odd Shift

Ex: Apr08

Ex:Active/Resigned

3. E-mail IDs with SAP/IH ID(For payslip).

SAP ID

Name

E-Mail ID

Month
Apr08+May08

4. Approved Other Input (Specify payment details) with SAP/IH ID.

SAP ID

Name

Amount

Type of payment

Period

Status

Ex: Incentive/Production Incentive

Ex: Apr08

Ex:Active/Resigned

5. Part-timer to be paid as FT during Training (Approved):

Ensure that all eligible are covered with correct SAP ID and avoid duplicity of data.
SAP
ID

Name

Process

No of days to be paid as
FT

Training Start
Date

End Date

Trainer Name

Process of Name Correction-: All employees have to ensure that they provide the correct name as per their 10th pass
certificate and mention the same information in your Bank A/c and in HR records.
Process of DD cancellation due incorrect name:
1. Original DD with rejection slip, received from Bank.
2. 10th Pass Certificate.
3. Application for name correction(Mention SAP ID).
4. Photo ID Proof(As per requirement)
Name Correction process in HR records:
1. 10th Pass Certificate.
2. Application for name correction.
3. Photo ID Proof(As per requirement.
4. Correct Information in below mentioned format

Dheeraj Singh

Page 54

International Journal of
Emerging Research in Management &Technology
ISSN: 2278-9359

SAP ID / Temp ID

Incorrect Name

Research Article

January
2013

Correct Name

Submit the above mentioned documents to your ER SPOC.

Importance of SAP ID-: It is very important that SO / TL provide the correct SAP ID to employees, if they dont have
the same thenthey can collect the same from their ER SPOC in below mentioned format :
Verify the SAP ID in the attendance inputs forwarded by you to the Process MIS as well as to the Central MIS Team..
Pay slips-: Currently you can request for your pay slip in two cycles as per below mentioned timelines:
SAP ID (required)

Temp ID

Name

Father`s Name

DOB

XXXXXX

XXXXX

XXXXXX

DD/MMM/YYYY

Cycle

Request on

Sent on

Remarks

1st Cycle

10th of every month

On and before 15th of same

month
Plz mark all request to your ER SPOC in the
below mentioned format

2nd Cycle

Between 3rd to 6th of every

month

20th of every

Pay slip request format:

SAP ID

Name

E-Mail ID

Month
Apr08+May08

Provide the correct and unique E-mail ID.

Separation ProcessSeparation Types : 1.Resignation2. Abandonment 3.Termination 4.Retirement
Resignation: Guidelines
Resignation should be submitted to the supervisor in writing.
Date of Submission of Resignation becomes the effective date of resignation for Notice period calculation.
Any employees resignation should reach HR within 24 hours of the resignation being submitted.
Resignation (Voluntary / Involuntary)
- Handover to the Supervisor
- Letter + Full and Final Form +
Exit Interview Form
- Handover to HR SPOC
- HR SPOC : Records Updation
The notice period for employees stands as under :
For Executives / Sr. Executives - Operations
1st Two Months in the Company No Notice Period
3rd to 6th Month in the Company - 7 days
After Confirmation i.e. 6th Month onwards 30 days
All other employees - One Month
If an employee wishes to resign, giving less than the notice period, the employee must pay the company an
amount equal to his gross salary pertaining to the notice period, on pro-rate basis. However, the Management
Dheeraj Singh

Page 55

International Journal of
Emerging Research in Management &Technology
ISSN: 2278-9359

Research Article

January
2013

reserves the right to accept or reject such requests to adjust salary against notice period. Management may require
the separating employee to actually work during the notice period.
The company reserves the right to relieve an employee with immediate effect on resignation from services
Entitlements :
1. Encashment of EL`s
2. Unclaimed Medical entitlements
3. Unclaimed benefits of the Company
4. Gratuity as per Gratuity Entitlement
5. Proceeds to Employees PF Contribution
Dues :
Separating employee shall handover following to the company:
1. Returnable company asset
2. ID Card
3. Company Documents
4. Policy Manuals
Employee will have to get Full and final settlement Form cleared from respective functions
(Process
Owner/ Functional Head, Administration, IT) and submit it to HR
HR to conduct Exit Interview with departing employee
Subject to positive clearance of all dues to the Organization HR will handover the relieving
letter after 50
Days
Full and Final DDs / Cheque are released upon producing the F & F receipt to HR along with
a photo
identity proof only.

Full and Final Form is available with all the process Owners

Exit Interview Form

Full and Final receipt Format

Abandonment of Services-:

If an employee remains absent for 3 consecutive days (without any information/approval). A notice against such
absence is issued by HR seeking explanation for such unauthorized absence and the employee will have to report to
work immediately. Such unauthorized absence will be treated as Loss of Pay and no salary will be paid for the days
of absence.

If an employee is absent from work without authorization or reasonable explanation, for mor then seven
consecutive days, it will be presumed that the employee is no longer interested in working for the Company and has
abandoned its services. In this case, an employee is not entitled to any statutory compensation.
Unauthorized Absence = Loss of Pay
3rd UA = Show cause Notice
7th UA = Termination Letter
Abandonment = No Salary Payout

Termination-:
The employee commits any breach of his/her duties and responsibilities under the contract of services.
The employee found guilty of any gross default or misconduct, which contravenes the expressed or implied
terms and conditions of employment.
Dheeraj Singh

Page 56

International Journal of
Emerging Research in Management &Technology
ISSN: 2278-9359

Research Article

January
2013

If the employee fails to comply with the Non-Disclosure policies of the company.

Full and Final Processing : Guidelines

V.
CONCLUSION
After the analyses of this paper I concluded that a computer program can maintain accurate and consistent database,
hence resulting is improve the performance and the accuracy of payroll system from SAP HR module which we
cannotmaintained by manual working process. Therefor the SAP HR Module is helpful for all the companies and
organisations where no of employees or workers numerous.My research paper on working process of payroll on SAP HR
Module benefits for the reader to understand the general aspect of payroll on SAP HR Module. SAP Payroll offers an
efficient and reliable payroll solution. Its innovative design and high-performance payroll functions minimise the time
needed to prepare and execute regular payroll runs for employees.
REFERENCES
[1]
Bedell, M. D., Floyd, B. D., Nicols, K. M., & Ellis, R. (2007).Enterprise resource planning software in the
human resource classroom.Journal of Management Education, 31(1), 43-63.
[2]
Helena Tadinen. Human Resources Management Aspects Of Enterprise Resource Planning (ERP) Systems
Projects, 2005.
[3]
J. CHENN Planning for ERP systems: analysis and future trend. Business Process Management Journal, Vol.7,
No. 5 (2001), 374-386.
[4]
SAP SAP Corporate Press Release June 13, 2001 (2001), http://www.sap.com
[5]
W.-H. Tsai, W.-R.Lin, S.-J.Lin, J.-L.Hsu., Investigation of ERP Implementation Problems in Organization
Environment, Proceedings of the 2009 IEEE IEEM, 2009.

Dheeraj Singh

Page 57